I received the following from a publicist and thought I would pass it on -

This Valentine’s Day people want to buy their sweetheart the perfect gift, but can’t afford to spend a fortune doing so.  Now with CurrentCodes.com you can afford to get your special someone the best gift without breaking the bank!

The site categorizes online coupons for almost 2,000 stores including with special codes that allow you to purchase gifts online (with free shipping or a special discount).

http://www.currentcodes.com/

Looks like a good deal!!

Tags: Bob Brooks, Deceptive Money, Prudent Money, Valentine's Day

I think that our current situation could feel like we are in a depression at some point.  However, I doubt that you could hardly compare this to the Great Depression. Michael Panzner wrote in his blog (www.financialarmageddon.com) a great illustration of those times.

“But then the world seemed benign enough in early 1931. It is the second phase of depression that does terrible things.

Roosevelt took over a country where the economic machinery had completely broken down. The New York Stock Exchange and the Chicago Board of Trade had closed. Thirty-two states had shut their banks. Texas had restricted withdrawals to $10 a day.

Few states could borrow on the bond markets. Illinois and much of the South had stopped paying teachers. Schools closed for months. An army of 25,000 famished war veterans squatting in view of Congress had been charged by troopers of the 3rd US cavalry with naked sabres - led by a Major George Patton.

Armed farmers threatening revolution had laid siege to a string of Prairie cities. A mob had stormed the Nebraska Capitol. Minnesota’s governor was recruiting Communists only for the state militia. Lawyers attempting to enforce foreclosures were shot. More than 100,000 New Yorkers applied to go to the Soviet Union when Moscow advertised for 6,000 skilled workers.

We forget how close America came to open revolt. Eleanor Roosevelt feared the country was beyond saving. Her husband kept the faith. He channelled the anger against Wall Street, diffusing it. “The practices of the unscrupulous money-changers stand indicted in the court of public opinion,” he began his presidency.

The Fed was an ideological deadweight. Bowing to pressure from Congress it began to purchase bonds in mid-1932 to boost the money supply, but then recoiled, before retreating into pitiful self-justification. A third of the rescue funds in Hoover’s Reconstruction Finance Corporation had been embezzled. “

Things could get bad enough for this time period to garnish its own depression label.  However, the Great Depression was not called “Great” for nothing.  Unemployment was 25%.

Tags: Bob Brooks, Deceptive Money, Depression, Great Depression, Prudent Money, Unemployment

I interviewed Sally Pipes yesterday on the Prudent Money Show.  She is the author of “The Top Ten Myths of American Healthcare.”  She is the President of Pacific Research Institute, a non-profit think tank that works to promote a free entreprenuerly-based society.  In other words, they promote everything opposite of our federal Government.  Through publications such as Sally’s book, the institute educates Americans on the reality of what is happening and exposes the nonsense that comes out of Washington. 

I wanted to highight the podcast in my blog in the event that you were unable to hear the program yesterday.  I found her take on the healthcare crisis in this country very interesting.

The bottom line is that politics has once again created beliefs about healthcare that are just not true.

To listen to the podcast, click here.

To get more information about the book, click here.

Tags: Bob Brooks, Deceptive Money, federal government, healthcare, myths, podcast, politicians, Prudent Money, Sally Pipes

On the 14^th of January, I wrote the following in my blog:

“The first level to watch is 850.  The market appears to be falling below that one day.  The second one is 816.  If we close below that level, I would expect the market to go down to the 740 level.  If the market closes below the 740 level, we could have a real problem on our hands and be heading down to 575 to 600.  The good news is that this should provide a decent buying opportunity.”

Thus far, the only part of that forecast that hasn’t happened yet is the re-visiting of the November lows.  We might see that prior to the close of January, which would be more than a 10% decline in the S&P 500.  A huge economic report is due to come out this Friday.  The Government will be issuing the economic growth numbers for the 4^th quarter and are expecting some pretty bad numbers.

This will be an important week that could give us a glimpse of what is coming down the pike for this year. We have two important indicators that we are watching.  The first is the December Low indicator and the second is the January Barometer.  Both are predicting a negative year at this point unless something changes this week. 

Tags: Bob Brooks, Deceptive Money, Government, market, Prudent Money

John Thain, the former CEO of Merrill Lynch, was given his walking papers yesterday by Bank of Ameria CEO Ken Lewis.  Thain was hired at the beginning of 2008 to help clean up the mess that Stanley O’Neal left behind,

So, what was one of the first fiscally responsible actions that he took to turn around a company that was mired in losses?  Well, he did what any prudent CEO would do.  He spent 1.22 million dollars decorating his office.

Yes, I cannot make this stuff up.  According to CNBC, John Thain spent 1.22 million dollars of his company’s money at a time when Merrill Lynch was losing billions.  When you are losing billions, what is a mere 1.22 million dollars, right?

You can get the full list of expenditures on the CNBC website.  

I think that my favorite was the $1,405 he spent on the Parchment Waste Can or maybe the $35,115 that he spent on a commode. 

You don’t have to look further than this story to see what is wrong with Corporate America.

Tags: Bank of America, Bob Brooks, CEO, CNBC, Corporate America, Deceptive Money, John Thain, Ken Lewis, Merrill Lynch, office, Prudent Money, Stanley O'Neal

Well it appears that Citigroup is having a tough time keeping their word to Congress.  Over the past few years, Congress has done a lot of talking about credit card reform with one of the focuses of eliminating the universal default clause. This is the clause that every consumer signs off on, allowing the credit card company to change the terms and conditions, interest rates, etc just because they want to do so.

In 2007 as Congress was talking about credit card reform, Citigroup promised that they would not raise rates on any cardholder as long as they were in good standing.

Last November, Citigroup went back on its word and started raising fees on customers in good standing.  The notice that they sent out said the following:

If the customer had not enjoyed a rate increase in two years, he or she could expect to enjoy one in January.  No, I cannot make this stuff up!

So why would they go back on their word?  Company spokesman told the New York Times that the business environment was tough and hurting bank profits.  As a result, they were forced to raise rates.  

This is an unfortunate trend that we are seeing all across the credit card industry.  However, not all companies are utilizing the universal default clause.  If this happens to you, take these action steps:

1)       As a general rule of thumb, be paying very close attention to your statements.  The credit card industry has at least until July 2010 to change anything it wants on your credit card account.  Make sure that you stay aware.  They don’t send out a lot of fan fair announcing these changes.

2)     If your rates go up, check your credit score.  If your credit score is in the 700’s, find some other company and transfer the balance to a lower rate.

3)     If your credit score is not very good, call the credit card company and aggressively find out what has to be done to get interest rates lowered.  When I say be aggressive, that means to be polite, persistent, and determined. If you don’t get a good answer, call back and or ask to talk to a supervisor.  It is hit or miss and sometimes depends on the supervisor and/or the credit card company.

4)       Don’t close the account.  Sometimes you get the option to do so.  Closing accounts has no benefit and can lower your credit score. 

5)       Don’t claim that you are being treated unfairly and just stop paying based on principle.  This is the worst thing that you can do.  By not paying, you will create a whole set of problems.  Remember when you sign a credit card application, you just signed away the option to be treated fairly.

Tags: Bob Brooks, citigroup, Congress, credit card debt, credit card reform, Credit Score, Deceptive Money, interest rates, Prudent Money

Today I had a caller ask about the best credit card reward programs.  There are two that I would investigate.  First there is the Pentagon Federal Credit Union.  They have a great overall rewards program.  The web-site is www.penfed.org.  You can join the credit union by joining the Family Military Association for $ 25.  If you have ex-military in your current or extended family, you can join for free.    This applies to US Army, US Air Force or Coast Guard, or Reserve, National Guard, or ROTC only. -

www.americanexpress.com

If you are focused primarily on travel, I think that American Express has the best program.  If you book a ticket through their travel service on-line, you can offset the cost of the airline ticket $ 1 for every $ 1 of rewards points.  It is one of the best services that I have found.  That applies to ANY airline. 

Good credit in both cases is required for acceptance.

Tags: American Express, Bob Brooks, Deceptive Money, Prudent Money, rewards program, THe Pentagon Federal Credit Union

A historic day in America with the swearing in of President Obama.  A not so great day for the stock market.  Even though the stock market has declined 72% of the time on inauguration day, yesterday’s sell-off was more about a potential banking crisis rather than keeping up with history.  

President Obama, on the heels of his first day, might be facing a huge crisis in the banking system.  In fact, we are seeing some of the same problems that occurred last year.  

The banks are clearly in trouble right now.  These problems started to re-manifest themselves weeks ago when the first $350 billion ran out and the second $350 billion had to be voted on by Congress.  It was almost like the sore was exposed once the band-aid was removed.  

The first $350 billion for the banking system was easy to get with no strings attached.  Now, it will not be that easy.  There is a demand for accountability and responsibility.  Thus far the banking system has shown neither.  We are no better off today than before the first $350 billion.

Stock prices are reflecting the concern.  The Banking Index, which is an index of the major financial institutions, is now down 77% from its high.  Let’s take a look at some individual names for a minute.  Once considered two of the strongest names in the banking business, both Citigroup and Bank of America appear to be in trouble.  Citigroup is now officially a penny stock.  It has fallen -93% from its high.  Bank of America is close to being a penny stock and has fallen -86% from its high.  

The biggest concern is that the stock price for Citigroup is falling just like Freddie Mac, Fannie Mae, and Bear Sterns.  Will the Government be forced to take over Citigroup?  

Prices of stock typically tell a story.  They are saying that there is something very wrong in the banking system.

This is happening all over the world.  The British government had to increase its stake in Royal Bank of Scotland, putting them just a little bit closer to taking over the entire banking system.  The concern is that the credit crisis is not being fixed and nothing that the government is doing is working.

Welcome to office, President Obama – this is your first true test.  

Tags: banking crisis, Banking System, Bob Brooks, Deceptive Money, President Obama, Prudent Money, Stock Market

It has been quite a day for this country as President Obama was sworn in as President.  Although I don’t agree with his ideas or politics, I am in full support of him and do not envy the mess that he has inherited.  Although I was not in favor of his election, I do think that he is the best man for the job given what we are facing right now.

The most important crisis that we face is the crisis of confidence.  NOTHING will work without confidence.  Politicians have done just about everything possible to destroy confidence, which leaves President Obama to pick up the fragile pieces. 

On top of that, you have the Bernie Madoff scandal and the loss of 50 billion dollars, as well as the latest scandal involving money manager Arthur Nadel disappearing with 350 million dollars. 

December Low Indicator

I wanted to alert you to an indicator that is flashing a huge warning sign.  There is an indicator that is written about in the Stock Market Almanac called the December Low.  It states that anytime the lowest close in December is surpassed by the Dow Jones during the first quarter, bad news typically follows.  It is a warning sign for the stock market.

Well it didn’t even take but 20 days.  As I write, the Dow is below the December low (8,149).  Another indicator is the January Effect.  The old saying is “so goes January so goes the rest of the year.”  Well, thus far the Dow is down -7.6% (as of this writing).  Combined they represent an ominous indicator.  Thus far they are both warning.

The financial stocks are getting hammered

The Banking Index is a good indicator to watch for potential recovery in the overall market.  Without the banks and financial stocks recovering, it is going to be tough overall for the stock market.  Since ‘07, the Banking Index is down -77%.  Today (Tuesday) as I write, the Banking Index is down another 13%. 

Banks fear an Obama Presidency.  President Obama wants to walk in and clean house.  Banks have been without TARP money and the problems are bubbling to the surface again.  Wall Street is concerned that Obama will get too aggressive too quickly.  Although we desperately need some reform and accountability, the patient is fragile.  I hope that he treads lightly. 

What to expect for the week?  The markets are speaking loudly that risk is high.  My concern lies with the stock market lows in November ‘08.   As I write, the S&P 500 is just 10% above that level and the Dow is just a tad over 7% above those levels.  In the event that the stock market indexes fall to those levels and lower, we could quickly be heading towards 600 in the S&P 500. 

Tags: Arthur Madel, Banking Index, Bernie Madoff, Bob Brooks, Deceptive Money, Dow Jones, politics, President, President Obama, Prudent Money, Stock Market, Stock Market Almanac

Tags: Bob Brooks, Deceptive Money, God, Prudent Money, tithe, tithing

It is amazing to me that there is very little outrage concerning the cost of this inauguration.  I must admit that I got it wrong.  I wrote last week that the taxpayer picks up the bill.  Actually, I read tonight that the Inaugural committee picks up the bill.  The article also said that the Disctrict of Columbia will pay $48 million for security and that Congress contributes $15 million.

To be fair, President-elect Obama has also raised a lot of money.  However, I cannot find anywhere who funds the “committee.”  They say they are being transparent and not to worry because the taxpayer is not paying for it.

That sounds like spin to me.  Who is this committee and how are they coming across so much money? 

Carole Florman, spokeswoman for the Joint Congressional Committee on Inaugural Ceremonies, told the New York Daily News:

 ”We’re always very budget conscious. But we’re sending a message to the entire world about our peaceful transition of power, and you don’t want it to look like a schlock affair. It needs to be appropriate to the magnitude of events that it is.”

Apparently you are not that budget-conscious.  You don’t have to spend millions of dollars to make something important.  It is either important and sacred or it isn’t.  Obama being elected as the first African American President is huge.  You don’t need to spend $150 million to show the world the impact of such an event. 

How about an accounting of that $150 million?

Tags: Bob Brooks, Congress, cost of inauguration, Deceptive Money, District of Columbia, inaugural committee, President-elect Obama, Prudent Money

I almost don’t know where to start.  The politicians burn $350 billion with nothing to show for it. They are about to burn another $350 billion.  Obama plans on mortgaging our future away by spending close to a trillion dollars to “save” the economy.

Now, his little party is going to cost an estimated 150 to 160 million dollars!  Are you kidding me?  We are facing one of the deepest recessions in decades and Washington wants to party like it is 1999.  How much more financially irresponsible could that be?  We are talking maybe a 1 day event.  Let’s say that the costs are applied to two days.  That comes down to spending $1,736.11 a minute.  Now that is some CHANGE!  I was thinking that the Obama promised “change” in Washington meant something else.

This is over the top.  With all due respect, Mr. Obama, you becoming President is not worth the tax payer paying out 150 million dollars.  Mr. Obama, while you and all of the other politicians are partying it up Tuesday, I want you to think about the greater than 2.5 million people who lost their jobs last year and the 3.2 million foreclosures that were filed last year.

The next time that the CEO’s from the big 3 want to fly their private plans to Washington…the next time that the boys at AIG want to throw a retreat at a nice resort on taxpayer money…please just remain silent and remember that you have committed the greatest double standard by allowing 150+ million dollars of tax payer money to be spent on a ceremony and a bunch of parties.

Tags: inauguration, President Obama

Attorney Dean Malone, who typically comes on my program and talks about dealing with abusive debt collectors, has discovered another type of consumer abuse – automobile fraud.  Dean talked about all types of fraud that are occurring at some very well known dealerships right here in Dallas, Texas.

One type of fraud has to do with negative equity.  Negative equity occurs when you owe more on your car than it is worth.  For example, let’s say that you owe $20,000 on your car and it is worth $15,000.  Many people find themselves in this situation today because values of pre-owned cars have drastically decreased. 

If you buy a car and trade a car in with negative equity, you can ( I wouldn’t recommend it) roll the money that you owe into the new car loan.  So, if the car you are buying sells at $25,000 and the negative equity (money you still owe on the car) is $5,000, then the loan would be for $30,000. 

The dealer should write up the contract to reflect the sales price of $25,000 plus the $5,000 for the pay-off of the trade-in.  A dealer who is commiting auto fraud would write the contract differently.  They would present it as a sales price of $30,000 and get the money to pay the car off that way.  It is fraud. 

As a consumer, you can sue a car dealer for that type of activity.  It is illegal.  You have to be very careful in these car transactions and make sure that you are not a victim of fraud.

Tags: auto fraud, Bob Brooks, car dealers, Dean Malone, debt collectors, Deceptive Money, fraud, Prudent Money

I wanted to send out an update on what is occurring in the market.  Unfortunately, the odds are that another serious decline started last week, ending the bear market rally from the bottom in November.

The news flow seems to be worsening again.  Of course, we are in earnings season and most of the earning, as expected, is not good.  However, this morning we find Nortel filing bankruptcy protection, retail sales falling in December at a much greater amount than expected, HSBC holdings announcing they are in need of 30 billlion dollars, etc.

It underscores that the heroic efforts of the Government is hardly working.  Although painful, we would get through this much more quickly with the Government out of the way.  After 350 billion, we shouldn’t be still having these problems.  Remember that a deflationary recession corrects itself.  There is no “medicine” for this problem.

NLet’s take a look at a roadmap for the S&P 500.  This should give you an idea as to the health of the market.  Right now we could be just going back down to the ovember lows and “testing” those lows, which is pretty common in bear markets.  However, we could also be going to brand new lows.  My lower targets for a brand new low are very far away from these levels.

The first level to watch is 850.  The market appears to be falling below that one day.  The second one is 816.  If we close below that level, I would expect the market to go down to the 740 level.  If the market closes below the 740 level, we could have a real problem on our hands and be heading down to 575 to 600.  The good news is that this should provide a decent buying opportunity.

We are working on a new format for the weekly Stock Market Outlook and transforming it into more frequent posts throughout the week to keep you posted during this ongoing financial crisis.

Tags: bankruptcy protection, bear market, Bear Market Rally, Bob Brooks, Deceptive Money, financial crisis, Government, market, new lows, Prudent Money, S&P 500, Stock Market, Stock Market Outlook

I have heard time and time again that the Government has to do everything in its power to prevent a deflationary recession.  They desperately want you to think that we they are winning the fight against deflation.  What they don’t want you to know is that deflation is here and that battle has been lost.

The minutes from the last Federal Reserve Board meeting revealed some deep concern.  Their notes signaled that “the recession could be longer and deeper than officials previously thought, with unemployment rising into next year and inflation slowing substantially” (another way of saying deflation).

First, a few definitions would be helpful.

A normal recession is one in which the economy goes through a period of weakness and then bounces back and starts a brand new growth cycle.  The growth in the economy contracts for two quarters at a minimum.  There is some pain for the economy.  However, it is not that bad. 

A deflationary recession is a much bigger recession.   Deflationary recessions are characterized mainly by falling prices and values of everything.  Think of a normal recession as a Category 3 hurricane and a deflationary recession as a Category 4 hurricane.

We should not be hoping we avoid a deflationary recession.  We should be hoping that the deflationary recession that is already here does not take hold like the one did in the 30’s in the US and the 90’s in Japan or transition from a deflationary recession into a depression (Category 5 hurricane).

It is hard to understand how any economist can look at this current environment and not come to the conclusion that we are in a deflationary recession.  You can see deflation in the stock market, real estate, the destruction of credit, the unwinding of the debt bubble, consumer prices on retail goods, the price of oil, consumer confidence, etc.

The unemployment numbers that came out on Friday emphasize the problem that we are facing.  We lost 524,000 jobs in December.  They revised the numbers for the prior two months and added another roughly 160,000 in losses.  This made 2008 the worst year since 1945.  We lost over 2.5 million jobs in 2008 and that was after the Government estimated in their numbers that we had created 904,000 jobs.  The unemployment rate stands at 7.2%.  Unfortunately, I think that this unemployment rate will easily be north of 10% before this is over.

The work week is averaging 33.3 hours.  That is the lowest on record.  Another sign of deflation came out on Thursday with the consumer borrowing numbers.  In November, consumer borrowing contracted by 7.4 billion dollars (another record).

My biggest concern is that the investor is drinking the Kool-aid that the worst is behind us and this is the greatest buying opportunity ever for the US investor.  Financial media is acting as if this is a normal situation where everything is at the bottom and it only gets better going forward.  

Continue to be careful with the risk that you take.  It looks to me like the bear market rally that started in November ended at the end of December and we are heading back into the bear market again.  

Tags: Bob Brooks, consumer confidence, credit, Deceptive Money, deflation, Deflationary recession, Depression, detb bubble, economist, Federal Reserve Board, Government, inflation, jobs, Newsletter, normal recession, Prudent Money, real estate, recession, Unemployment, unemployment rate